Low down payment requirements: Borrowers can qualify for a mortgage with a down payment as low as 3.5%.
Lower credit score requirements: Unlike a conventional mortgage, borrowers can qualify for an FHA loan with a credit score of 580 or higher; however, many lenders require a score of 620 to 640 to qualify. In some cases, borrowers may be able to qualify for an FHA loan with a credit score between 500 – 579, but a 10% down payment is required.
Looser down payment restrictions: FHA allows borrowers to qualify with a down payment from donations, grants, gifts, private savings clubs, savings bonds, IRAs, 401(K) accounts, investments, and down payment assistance programs.
Federally guaranteed: FHA loans are guaranteed by the U.S. federal government. Borrowers pay FHA mortgage insurance premiums (MIP)